China's Geely seals Volvo Cars takeover

Chinese carmaker Zhejiang Geely Holding sealed a 1.8-billion-dollar deal on Sunday to buy Volvo Cars as the Chinese company unleashed its global ambitions with what it called a Swedish "tiger".

The deal ends more than a decade under the ownership of Ford Motor Co. which saw the up-market Swedish carmaker become a loss-making thorn in the side of the US giant, burdened with its own woes.

Geely chairman Li Shufu said he saw huge untapped potential for Volvo in international markets and especially in China, which has not only the biggest but also one of the fastest growing car markets in the world.

"I see Volvo as a tiger. (The) tiger belongs to a forest, it can't be found in a zoo ... We need to liberate this tiger," he told a press conference after the deal was inked at Volvo Cars headquarters in Gothenburg, southern Sweden.

"The tiger has a heart and it lies in Sweden, (and) in Belgium but it's power should be projected all over the world.

"I see China as one of the markets where Volvo can show it has the opportunity to liberate itself," he said.

In the face of concerns that the Chinese group would slash jobs in Sweden, Geely said that it would keep Volvo Cars plants in Sweden and Belgium and was considering opening factories in China for the local market.

Geely said that it had not only secured financing for the 1.8 billion dollars (1.3 billion euros) it was paying, but was also eager to keep the struggling Swedish carmaker in operation.

It also said that the deal, which Ford initially agreed to in December, included agreements on intellectual property rights as well as supply and research and development arrangements between Volvo Cars, Geely and Ford.

The US group bought Volvo Cars, which is known for its sturdy, family-friendly cars, in 1999 for 6.4 billion dollars as part of an international push into the premium market, that eventually cost Ford dearly.

Ford Chief financial officer Lewis Booth told journalists that his company got a "fair price and "we're very happy with the deal."

For Geely, which started out as a refrigerator parts maker, the deal marks a new chapter in its international expansion after two of its Chinese rivals failed to take over Western brands, Hummer of the United States and Saab of Sweden.

The deal had initially caused consternation among unions at Volvo Cars, which employs around 22,000 people worldwide, including 16,000 in Sweden

Unions originally opposed the deal on grounds that it was vague on expansion plans and possible layoffs amid fears Geely would not provide financing for daily operations or future investments.

But on Saturday they pronounced themselves satisfied.

In addition to preserving Volvo Cars' factories in Sweden and Belgium, Geely said that the Swedish company would be run as a separate company with its headquarters in Gothenburg.

"Today I am reassuring that Geely is determined to protect and nurture everything that is great about Volvo. Volvo is Volvo and Geely is Geely," said Li, who is also the Chinese company's founder.

"Volvo will be run by Volvo management, and be strategically independent. They are distinct companies. Volvo is a Swedish business with a strong Scandinavian heritage," he said.

With a workforce of 12,000 people, including 1,600 engineers, the Geely group has grown into one of China's largest private carmakers since it launched its auto manufacturing business only in 1997.

It operates six car assembly and power-train manufacturing plants across China with a combined production capacity of 300,000 cars per year. The firm also owns nearly 500 dealerships and 600 service stations in the country.

Geely has an overseas sales and service network of nearly 300 outlets and runs plants in several foreign countries including Ukraine, Russia and Indonesia. Overseas sales have however totalled less than 200,000 units so far.

map/fc/lt/cjo

 

PROMOTED VIDEO
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs General

    h2 Recruit Ltd: Inside Sales Manager - Accountancy Software - £80,000 OTE

    £50000 - £60000 per annum + £80,000 OTE: h2 Recruit Ltd: London, Reading , Sou...

    h2 Recruit Ltd: Business Development Manager - BIM Software - £55,000 OTE

    £40000 per annum + OTE £55,000 +Pension : h2 Recruit Ltd: An excellent opportu...

    Recruitment Genius: Senior Commodities Brokers / Sales / Closers / Telesales

    £10000 - £100000 per annum: Recruitment Genius: Investment consultancy firm sp...

    Recruitment Genius: Warehouse Operative

    £7 per hour: Recruitment Genius: This high quality thread manufacturer is recr...

    Day In a Page

    Homeless Veterans Christmas Appeal: Drifting and forgotten - turning lives around for ex-soldiers

    Homeless Veterans Christmas Appeal: Turning lives around for ex-soldiers

    Our partner charities help veterans on the brink – and get them back on their feet
    Putin’s far-right ambition: Think-tank reveals how Russian President is wooing – and funding – populist parties across Europe to gain influence in the EU

    Putin’s far-right ambition

    Think-tank reveals how Russian President is wooing – and funding – populist parties across Europe to gain influence in the EU
    Tove Jansson's Moominland: What was the inspiration for Finland's most famous family?

    Escape to Moominland

    What was the inspiration for Finland's most famous family?
    Nightclubbing with Richard Young: The story behind his latest book of celebrity photographs

    24-Hour party person

    Photographer Richard Young has been snapping celebrities at play for 40 years. As his latest book is released, he reveals that it wasn’t all fun and games
    Michelle Obama's school dinners: America’s children have a message for the First Lady

    A taste for rebellion

    US children have started an online protest against Michelle Obama’s drive for healthy school meals by posting photos of their lunches
    Colouring books for adults: How the French are going crazy for Crayolas

    Colouring books for adults

    How the French are going crazy for Crayolas
    Jack Thorne's play 'Hope': What would you do as a local politician faced with an impossible choice of cuts?

    What would you do as a local politician faced with an impossible choice of cuts?

    Playwright Jack Thorne's latest work 'Hope' poses the question to audiences
    Ed Harcourt on Romeo Beckham and life as a court composer at Burberry

    Call me Ed Mozart

    Paloma Faith, Lana del Ray... Romeo Beckham. Ed Harcourt has proved that he can write for them all. But it took a personal crisis to turn him from indie star to writer-for-hire
    10 best stocking fillers for foodies

    Festive treats: 10 best stocking fillers for foodies

    From boozy milk to wasabi, give the food-lover in your life some extra-special, unusual treats to wake up to on Christmas morning
    Phil Hughes head injury: He had one weakness – it has come back to haunt him

    Phil Hughes had one weakness – it has come back to haunt him

    Prolific opener had world at his feet until Harmison and Flintoff bounced him
    'I have an age of attraction that starts as low as four': How do you deal with a paedophile who has never committed a crime?

    'I am a paedophile'

    Is our approach to sex offenders helping to create more victims?
    How bad do you have to be to lose a Home Office contract?

    How bad do you have to be to lose a Home Office contract?

    Serco given Yarl’s Wood immigration contract despite ‘vast failings’
    Green Party on the march in Bristol: From a lost deposit to victory

    From a lost deposit to victory

    Green Party on the march in Bristol
    Putting the grot right into Santa's grotto

    Winter blunderlands

    Putting the grot into grotto
    'It just came to us, why not do it naked?' London's first nude free runner captured in breathtaking images across capital

    'It just came to us, why not do it naked?'

    London's first nude free runner captured in breathtaking images across capital